Why it is so important to regularly review your business plan

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Why it is so important to regularly review your business plan

There is only one way in which you can remain in control of your business' future - and that is to continually monitor and review your business plan. This will ensure objectives are being met and all opportunities are being addressed.

Your original business plan would have identified your vision for what the business would look like in a nominated period, say five years. This would have been based on the core capabilities of the business then and other factors at the time, like the economy, your financial capabilities, threats, challenges and opportunities. Any or all of these factors can change dramatically in a day, a month or a year. No business plan is cast in cement. It is a moving, changing blueprint.

As your business moves through its growth cycle, whether it is growing as it was planned, is having problems, or even moving away from its original core business, regular reviews will help you identify areas for improvement, while at the same time identifying your strengths, successes and wins, enabling you to build on these foundations.

A simple 4 step review process

1. Undertake a SWOT (Strengths, Weaknesses, Opportunities and Threats) exercise
Identify the current strengths, weaknesses, opportunities and threats of the business.

2. Evaluate
Evaluate the progress of the plans and measure their success against pre-set KPIs (key performance indicators).

3. Revise
Be prepared to adapt or change your business vision in line with market changes or other influential factors as mentioned earlier.

4. Rethink your company's core competency or competencies
While the vision and future success of your company doesn't necessarily have to rely on its core competency (ies), more often than not it does. It is easier to build on historical strengths rather than develop new ones.

It's also important to appreciate that if business plans or goals are changed it is necessary to ensure that your management's overall vision for the company matches these new objectives.

A more comprehensive, in depth review process

To undertake a more comprehensive review you will need to look at each of the following aspects of your business in detail:

A. Your company's background and organisation including its:

History
Organisation
Financial results

B. Operational overview including its:

Management issues
Organisational issues
Training issues
Administration issues

C. Your company's strengths, weaknesses, opportunities and threats (Undertake a SWOT exercise as above)

D. Key development strategies
What are your business' key success factors?

Consider what your business has to offer that is special or unique and what you can do to capitalise on this offering.

E. Research and development

Consider whether your organisational plan includes research and development (R&D)?

If your company wants to improve its position technologically consider whether it has the sufficient time, and appropriate money and resources to do this. If not can existing resources, systems and procedures cover the increased load; or could forming strategic alliances or pooling resources with other synergistic organisations be an option?

F. Analysis of market structure

Undertake a review of existing tests and data collation methodology; primary data sources; any ancillary methodology for secondary and tertiary research; collated statistics; and accredited and sourced information.

Evaluate market size by quantifying the market, both past and present, in both dollars and product turnover, identify market segmentation(s) and market sub-groups and the products and services within each segment; and analyse the market share for which the business is responsible.

Identify national, state and international market growth potential.

Evaluate the growth or shrinkage of market segments over next 3-5 years

Determine whether the product volume that is required is actually achievable in the market.

Consider monthly and seasonal anomalies

Review your pricing strategies.

Review the pricing strategies of your competitors.

Evaluate your current promotional strategies.

Identify new PR strategies available to your business.

Review and evaluate market and projected trends.

Review your marketing strategy and determine whether your objectives have been achieved? If not, why not?

G. Review your growth projections – sales, financial performance, revenues, sales forecasts, risk assumptions, projected market growth, statistical trends, etc? Are they achievable?

H. Review your financial projections and analysis

Consider your business' policy and its historical performance; the composition of its assets and liabilities; and its profit and loss, break even analyses, profitability and turnover.

Some final considerations

Develop:

an internal and external communication strategy to outline what information is to be made available both within and outside the company.
initiatives to avoid conflicts of time, achievement of deadlines and ensure availability of resources and money.
manpower responsibilities and leadership to make things happen

In conclusion

Reviewing your business plan regularly is a critical component of running a profitable and successful business. Situations can change – for example, new economic and financial considerations, competitor consolidation, acquisition of a major customer, new legislation, to name but a few- and any of these factors should trigger a review of your strategic objectives and your business plan.

Get professional assistance

Kreston Dormers can work with you to enhance your business' performance and profitability. Our focus is on helping you to create and preserve wealth, and cover the key bases of business success. Contact us to speak with a specialist who will offer practical, results oriented solutions to your individual business problems. We take the time and trouble to understand your business and its potential.

Author/Editor: Charisse Gray
Source: www.nswbc.com.au

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